China: local brands fear foreign automakers

China’s Association of Automobile Manufacturers, the country’s main auto group, said that local auto brands would be “killed in the cradle” if the state government relaxes foreign automaker’s rules on domestic involvement.

As the association just reported January sales, it voiced concern that while foreign carmaker like GM or Ford had record industry sales, Chinese brands, like Geely Automobile who saw deliveries falling 47 %, had a market share drop of 4.9 % from last year’s 38.4 %.

“Relaxing the current foreign ownership restrictions will wipe out Chinese brands,” the state-based auto association said in a statement in Beijing. “Foreign companies can totally use the competitive advantage of their global supply chains to support a price strategy to kill Chinese brands in the cradle.”

Dong Yang, secretary general at CAAM, also said the Chinese local brands, who saw a combined sales decline of 5.1% in January, could experience further declines throughout the year as foreign brands are far more competitive because of their perceived quality and service.

The escalating concerns come as back in October 2013, a Chinese commerce ministry official said at a forum that one day local brands would have to be ready to compete with tougher opponents, as the state imposed stake limit could one day be lifted.